hello. h to today's "worldwide exchange." it's ross westgate. >> and i'm kelly evans. investoring have to wait ten days to find out how much they actually need. >> and china's strength dent is made. it also shows industrial output and retail sales slowing. >> china's airline industry is set to soar. they outline a massive expansion for new airports and jet purchases.

okay. so it's the start of another week. great to be back after my holiday. we just got 12 stocks declining. one hour into the trading session. so heavily weighted to the upside, falling due to the news with the detail about spain potentially getting a 100 billion euro loan. let's show you where we stand on the individual indices. last week, ftse up 1.5%. the cac 40 is also up 3.4. the spanish market, no surprise, got the best gains up, 4.3%. remember, we're bouncing after nine-year lows for spachblt

spanispa spain. ba ba bankia up. you can see we're back to below or around 126. dollar/yen, 79.54. aussie dollar, u.s. dollar. sterling/dollar. what about the bund market. this is really going be the key test? what hatches with these yields rather than the stock reaksz. italian ten-year yields getting back down toward the 6 year level. ten-year yields. as far as ten-year bund yields are concerned, 1.388. remember, we got down to what? 1.14 back on june 1st was the record throw there. gilt yields, 1.69.

besides the news out of euro, china helping. crude just bouncing back. brent, 101. gold a little firmer and even kocher is firmer at 336. suggesting things like china. what about the asian spectra? szechwan lee is with us. >> thank you. it was. as bad as most feared. shanghai stocks rose nearly 1.1 percent. among the top garons, shipping.

they both recovered from recent lows. china euna come shares close. it will buy a 6.4%. tokyo stocks recouped. nikkei up about 2%. especially those exposed to europe. south korea equities closed at their highest level in almost four weeks. led by sk innovations, nearly 7% job and gs holdings, 5% rise. quick check on indiindia's nig. after spain secured that bank rescue deal. back to you. >> okay, sixyuan, thanks very much for that. you're back. >> you're back. i take off. i go to the opec meetings, which we'll have plenty of news.

alisa was great. she sat in last week. >> a little too good for my liking. >> sitting a little uncomfortable. holiday was good? >> it was good. anything happen while i was away? >> you missed the french open. it had nothing else do with anything roiling global markets. speaking of roiling global markets, we have details. a lot of the details remain unknown but they're unknown. we have an eu official talking to dow jones apparently saying the interest rate of the loan to spain banks has not been defined yet. it will be on the range of the average of 3% to 4% and it will depend on market conditions. he or this official is also saying it shouldn't affect spain's deficit. this despite the deficit that it will ultimately be channeled

through the sovereign and could affect its fiscal health there. we'll continue to bring those to you throughout the morning. it's said the bailout of spain's banks will be subject to conditions that they'll have to put forward restructuring plans. his comments lead to the deal. they have refused to call the deal a rescue and instead insist the implementations helped to avoid bailout. >> translator: if we had. done what we have over the last five months, what we would have faced yesterday would have been a bailout of spain. but as we've been doing our homework for the last five months, what was put before us and what was decided on was the opening of a line of credit for our financial system.

>> spachb yards have depicted him a coward. finance minister luis also failed to call it a bailout. >> what we're asking for is financial assistance. it has nothing do with the bailout. it will go to the fund for orderly bank restructuring and from there it will be ichb jekted into the spanish equities that wand it. >> ali, first to you. you write that this is the first spanish bailout but not the last. >> absolutely.

understandably they don't want to label it a bailout but, quite frankly, i can't think of what else it is. it's in line with the numbers that both ourselves and others in the market are looking for. >> ol'ol'y, leaving that aside, it regargd leaving the banks down the road? >> from a bondholder poichblt e view, there are still too many questions. for start there's where the money will come from into the es -- i can't say it. european financial stability fund -- no one can say it. the esm would mean that those credits would be ranking super senior to existing spanish sovereign debt holders which would cause a problem for the

banks which hold about 20% outstanding at the moment. but there's also a question of bail-in. they'll want to bail out the banks without it laboring or being too heavy on the public finances. so there may be further cause for bondholders to pay or share in the burden and also, of course, shareholders. >> let's bring anin also. it's obviously it's a worst-case scenario. about 450. >> well, 100 billion is at the low end of our range of estimates as well, which goes up to a quarter of a trillion. i guess what they're trying to do really is reduce the burden and maximize the amount of capital that the banks in spain take. as the last speaker said,

there's not going to be an end. >> arnab, i think it's safe to say if you look at the rally, the risk of move and the move we're seeing in the ten-year and cds spreads it has to be predicated not just on the banks but really with the dress speegle report and everything else that it's everything coming today that's underpinning markets here. >> i think it's too early to be shoe that that's the case. after all, what is happening here is the money is being lent by initially it would seem from the efsf and ultimately through spain through the fraub to go into the banks. that would be a very clear step, would have been a very clear step. >> let's actually ask olly. olly, i'm curious on this question. i know they're prohibited if there directly lending to the banks. but can't we at this point rewrite a few rules as we've

ruled everything else? i think it would be better to give it to the banks correctly. >> i agree. it's probably what is needed here. we need some disease it action from the european partners and basically, you know, the crisis has shown that this is a systemic problem, not a fundamental problems. you can fix the problems of the solvency of the banks but you still need to fix the eurozone problem. >> there's no indication at all is there that there is any step toward debt neutralization. >> no, not at all. we're quietly optimistic. this is as though the patient has started taking the medicine. it's a treatment. it isn't a cure. but at least they are acknowledging and there's some leveling of pooling of debt even though that debt is the obligation of spain itself. >> yeah. which makes the problem a little bit worse. and, of course, depending on whether we get support as well.

arnab, to just bring you in, you say this is a bailout. spain is calling it a bailout. if it is bailout, it's bailout with very light conditions. >> yes, absolutely. >> if greece don't -- if they do get in a new democracy group aren't they going to turn around around say, we want the same conditions as spain? >> yeah. >> everybody's going to say why don't we have these conditions. >> this is what happens when you make it up as you go along, right? that's what the situation is here, which is perfectly understanding because it's a fast moving crisis. what needs to be done in europe to solve this problem, it's all third rail. it's difficult to do. they're going to keep making it up as they go along. >> to your point about third rails, the same official talking to dow jones talking about the details or lack tlofr on this plan seems to be mentioning that, oh, by the way, they're on

thec. you can see the pressure coming from the european directors to sort of use the stick approach as much as they can to get spain and other countries to fall in line. >> yes, absolutely. i think one of the problems we're going to face is this program is going to be less intrusive. so it's going be more political rather than more technocratic, as was the case with the other three countries and particularly greece, which led to a different category of political problems. maybe we'll avoid those problems in spain, but we'll get more economic and financial. >> is your baseline review structuring for the sovereign debt? >> we think it's coming. probably not immediately but a few years away. it's in the pipeline. >> olly, what's going to be the focus as we go through the next following days and weeks? >> we wouldn't be surprised that there's a small fill-up in the

market today. there's a small risk on move but i think that will run out of steam very quickly. go bake to 2010 when we had the announcement of the first bailout. it's the big headline to sort of stave off the inevitable and to create common markets. but once it dawned on the markets there were no detail or hard facts behind the headlines, the risk off again. >> okay. olly, thanks. stick around. of course, we heard this with the spanish politicians saying it was still okay to watch football. this great tweet came out from some irish fans as well. angela merkel thinks we're at work. they're on the end of bailout and they're supposed to be working their way through it. >> when angela merkel has name

recognition among the broad european public, it kept be a good sign. >> when they think, they believe, they feel they're under german instruction. >> yes, guidance and tutelage. >> good way of putting it. china's may data has confirmed the world's second world economy slows down. it also explains beijing's preemptive move but china's trade figures surpass all expectations. the dip in last month with a drop in exports. they say the trade situation remains grim. they say beijing will have to count on luck if it plans to hit itself 10% trade tar get for the year. for more we're joined by chief economist for emerging markets at ddva frmt thanks for joining us. are the economists going to get lucky? >> well, the numbers are better

than expected but that doesn't mean they're great. we are seeing a soft london but it's still a london. i think they're going to land at about 8% this year, which is a number that you'll probably find right for 2012. probably the most important day to come is long growth and they'll see whether what we've seen with interest rate -- with the first interest rate cut in eight years is going to start showing -- if people were anticipating it somehow. you know, bringing some more low dproukt to the picture which would then sustain that dproukt we are estimating for bbva research.

>> . >> elise ya, what about the events in europe? >> of course, some of china's things are driven by it. a look at basically the shape of exports, where have exports fallen the most or grown the least within the numbers that were just released, of course, europe is an outlier. so exports to china have grown about 1.3% to europe as opposed to about 13% to the u.s. for example. so that's showing the data where that that's where it's coming from. but thing china has its own

issues it's dealing with. one, of course, is the very rapid loan growth they mentioned. it's related to too high interest rates not withstanding the very large fat margins that banks have had for a long time and which would have allowed them in a way, you know, to narrow them down and compete more, which hasn't happened. so i think the chinese government is starting to talk that as well and make banks earn less and have the real economy get more access to borrowing from the banks. >> alicia, i guess the real question here is as export growth slows down over time and as credit growth slows down in china as well, as you say, the real question is how quickly and how much can china rebalance toward domestic consumption away from investments and exports to hold up that growth rate? what's your thought on that key question? >> yep, yep.

well, it's crucial, of course. i mean i think there's two ways to look at it. narrowing the interest margin should actually be positive for consumption as opposed to investment. and as far as you would have basically probably higher deposit rates and therefore, you know, a higher real interest rates for those who are saving in china, mainly the households. yeah, not so cheap money probably for those investing. but, still, i mean this might not be true. if we look at the science we've heard from the fiscal package that has been like withdrawn from the news, i guess it will still be there in a way.

if we run bit measures that are not timely enough, they keep them pressing, these -- they keep on avoiding the rebalancing that we would all like to see. >> okay. alicia, thanks very much. alicia garcia-her rare rowe. >> here's a check on what else is coming up on today's show. more on china. we're at the beijing show wherearily executives are telling us how they're bracing for headwinds out of europe. in 20 minutes we'll hear from the ceo of klm on cnbc. and german chancellor angela merkel is facing a tough time with her opposition. she's not looking to underline the euro path. >> we'll hear from the shipping department. and after that we'll ba back out in madrid. we'll talk to the man who's

worked for the spanish central bank and imf. so he has plenty of experience we'll tap into. also, finally apple's worldwide development conference is kicking off in san francisco. today we'll have a view from the ground to find out what take they'll have when tim cook deliver hids key note address. some have called it a res skuchlt spain's prime minister simply describes the 100 billion iuorio credit line to his banks as, quote, what happened yesterday. some of say rajoy is wanting to distance himself from ee developments like ireland. what do you call it. you can i'm us or tweet us at cnbc weks or reach us. we'll be right back. [ male announcer ] this is the at&t network...

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they i're they're keeping to it.

emi emily chan caught up with them and she cement us this high light report. >> reporter: we're here in beijing as they hold their 16th annual summit. of course, they have maintained their contact. keeps it unchanged at $3 billion. the mark has helped drive improvements. having said that, this is the second consecutive year of declining profiting. they had a record in 2010. net margins just under 3%. the following year in 2011 it fell in half and it's expected to fall by more than 50% this year to $3 billion. but all of this, we're seeingism proved prospects from north america as well as latin america. things unchanged. is business environment is

deteriorating rapidly. another downgrade for the asian pacific as well as the middle eastern markets. we got a chance to speak to tony tighe ler, inspector general of i atta. >> what's happened in the last few months is fuel prices have come off a little bit, but the eurozone crisis has worsened. together with various other adjustments, what is meant is that we see u.s. carriers making a little more money than they have last year but all the other carriers making less money. in fact, in europe we see airlines loves over billion dollars, clearly very difficult times for them. >> the scheme initiated by the european commission has also been a topic of discussion. now some 1,200 airlines have complied with the ets. ten of them did not, namely from india and china. chinese airlines have cut our suspended ordered to airbus as a

result of this emissions trading scheme in which airbus says they're being unfairly targeted. >> we're lobbiying and it is unfortunate, yes, i guess because we're very visible, we have become a bit of a scape goat and the worst part is we have agreed. it's ill-conceived. how can you sit there as one country or a group of countries and start passing a tax on fuel consumed in somebody else's country? that's exactly what the cts does. >> iata is now calling on europe to diffuse the situation. that's the latest from beijing. i'm emily chan. >> all right. still to come on the show, we'll have plenty more on the airline sector. can china help the industry out of its malays? we'll talk with an analyst in just a minute. we've got more headlines from spain. stay with us.

here are the headlines around the globe. itfuls to around the 6% level. >> this as they get a hundred euro but investors have to wait

ten days to find out how much they need. >> the latest figures out of beijing also show industrial output and retail sales slowing. and china's airline industry, though, is set to soar. beijing aviation officials outline a massive expanse plan for new airports and jetline purchases. >> we have relief markets. down to the span is bank loan. the ibex is having the best of it, over 4%. remember, we're bouncing off four-year lows. again, after a very heavy period of selling off. bund yields which is probably going to be the true measure of how we fair here. well, in sparngs getting back toward that 6% level. italy down to 5.71% and off the

exceptionally low levels we hit the last time i was in the studios on june 1st. the euro/dollar got above 1.76. we're declining from the 126 level. the dollar/yen is steady at 79.55. let's get more on exactly what this bailout -- i don't know if we should call it bailout. it's a bank loan. bank loan to spain, kel where. >> ross, i think you're tanging the spanish line there. it's the line of credit. that's what spain is trying to say. it's different than necessarily giving money just to the country for the sake of the country itself, but anyway, let's first give you the details of the rescue plan that was agreed to over the weekend. it will provide up to a million dollars to spain. but because the institutions are involved, the european ones and the imf, which isn't involved in this case, but if it were involved, can't give to the

banks directly. what they're doing is giving money to spain and spain will then use that for its version of kind of the u.s. t.a.r.p. a bailout. don't worry about that. it's a frob. this money will come either the efsf or esm. if it comes from the efsf, the people are not subordinated. if it comes from the esm, they are. keep that in mind. we'll talk all morning on that. it will be dispersed right away. won't be specified until june 21st. also not specified is further details on the terms of the loans although an eu official speaking on television quoted by dow jones says they'll be at a 3% to 4% interest rate. interestingly enough the same official is saying the whole scheme won't add to the deficit

because of special accounts maeshs though it will add to the dead levels. take a look at what we'll see in terms of troubles in others in europe. let's start with the biggest check that's gone to greece. 257 bill yochb euros and a couple of different programs going back to 2010. second, ireland, this going back also to late 2010. portugal, that's been on the scale of 78 billion. almost $80 billion in aid. these three going to the countries directly. when we come now to spain, much, much, much bigger economy, only needing a hundred billion euros or up to that amount or just for the banks. you can start to understand why some peel are worried why this may be the opening gambit and what relates to a lot more aid to the banks and potentially to the sovereign itself. a number of analysts on cnbc have been talking about this aid deal. here's a sense of what they've been saying about it it's good for the banks in the short run and there is access to

credit but this doesn't solve a lot of the underlying problems that spain has which is essentially the lack of growth in spain and also a property market that keeps turning down. >> the main enemy is the recession and the recession is starting in the last summer, and we have buried the press. the fiscal policy is it. if we don't modify these kind of policies, we're going to have it. >> the positive is that there's now up to a hundred billion euros to recapitalize spanish bank banks but the uncertainty for the banks themselves is you're potentially facing quite a significant dilution once the deposit decides how much equity is going to be injected into the banks. >> they eastern warned that it could determine their future for your the next ten years. righting in the "daily

telegraph," he emphasized the need for euro countries to move toward further integration including adoption of euro bonds and help for smaller economies. he emphasized that they would resist any moves to impose rules on its own banking sector and solverty. >> angela merkel could have a tough time supporting the eu fiscal path. this after der speegle not wants to support a wide transaction act. patricia has more on this from frankfurt. this sounds like politics. >> well, it actually -- we really should speak about it differently. when it comes to the financial transaction tax. that happened last week. of course, what happened in the speegle article is angela merkel

said, of course, we're for it, however, we doubt that this is actually manageable within the current legislative period an think we have to really stress that because i think that the opposition parties have started to move together and that the groundworks are still being laid. however, whether or not we can really see this being realized and even implemented within the current legislative period which runs to the autumn of 2030 is a big question mark and that was also said by our finance minister. so i think that two key issues at stake here, there are many meetings going on today and wednesday as well. talking about the eesm. that's something angela merkel needs to get done, especially the esm because now if more money is being needed for the spanish bank issue. the other thing is the spd is trying to exploit this. they're still moving together,

especially when it comes to the financial transaction tax, i think. >> all right, patricia, thanks. >> this is according to the german newspaper der speelg. they're amongst policy makers drawing up rules on how they might work. but the key thing is they can draw up all the rules they like. but if the germans don't want them, they won't have them. >> that's right. the japan corporate worsen birthday u the rest of the outlook may be looking brighter. we'll get more from nozomu kitadai in just a bit. >> the mood among big japanese company. the anxiety about the euro zone crisis were factors this soured their mood. but for the next two quarters, firms are forecasting the index will return positive.

it's due in part to reconstruction after last year's quake and tsunami. the first quarter gdp has also improved the outlook. at the same time, consumer confidence may rose for the first time in two months. japanese statistics show that nearly 41% pleasure their living standards will improve over the next six months. that's up 7 points from april. >> we'll have to get nozomu kitadai with us back tomorrow. >> we do. i want to pick up with ana on one thing. i want to talk about the europe bonds. this idea of fiscal union and this thing. at the end of the day, this will rest with german. i haven't seen a single indication that they have moved their stocks, have theysome. >> i think they're kind of the weighted damage in germany. maybe we ool have euro bonds, maub we'll have a fiscal union but that will be the end of the process. that's the whole issue of moral

hazard and this question of, really, can germany afford to pay all these bills if nobody else can. the clear answer is absolutely not. >> i think we are actually seeing some movement here, however slow and gradual it may be. this is where the der spiegel report comes from. it would include joint euro bonds. >> the institutions are up, but it's a bit like the -- the power in europe rests with germany. they can create all the plans they want. but it's pointless unless anybody in germany politically decides they want it. >> i do think germany has been more open to this redimgs funds which would basically be something they use to move forward. >> it's a very interesting idea but what it means is a country like italy which has twice as much debt as it's supposed to would have a period of time that's a big fiscal adjustment, much bigger than what's on the cards now. so over 20 years italy would

have to reduce its debt from 120 to 60, right? it would get a subsidy from europe as a whole to do that but that would mean it would have to make a straight line adjustment of 3% of gdp a year. that's much bigger than is in the cards now. so if you actually think of what they're talking about, at one level it sounds good. >> it's also a clear way of giving more power to brussels or germany over the finances of these countries. what it says is when you borrow beyond what you can directly support, you have follow our conditions. >> it's different form of the fiscal compact. >> but if you get a different name, ross, it's a tellally different thing. >> but it's the same as saying you put yourself in order first, then we'll backstop you, right? it's the same principle. >> i think the underlying issue is the power rests with the people. last i checked they're all democracies. nobody is in favor of what's put on the table, whether it's by

germans or brussels. >> you say that but not any of them got asked when they wanted to join in the first place. there's a democratic deficit right from the start on this. >> democratic deficit. i like that one. >> right. >> quite true. >> yeah. now, let's move on. the sky's the limit. the civil aviation administration of china says the country will be buying more than 300 commercial jets each year from 2000 to 2015 and that's not all. 17 new airports will be built with more than 100 others renovated. the plans were laid out in beijing at the auto annual summit where they stand out as a bright spot. cnbc's emily chan sat down with tony tighe ler and asked hill about the world's second biggest airline market. >> think china's going to continue to grow very well next year and in the future because the chinese economy is still growing faster than most other kmts in the world even if it slowed down a little bit and the

chinese government believes aviation is an effective engine of growth for the economy and for jobs and for social development to so the government is providing infrastructure, providing airports. >> we've seen a fall in fuel prices so far this year, but that's is due to a slowdown in the global economy. how is the aviation industry dealing with these two issues? >> yes. fuel prices have come down a little bit, but they're still very high. it's still very high by historic standards and the reason you say it's come down is because of the outlook on the economic side is not so good. so this is goichk to be a mixed blessing for airlines. as the economy weakens and traffic slows and yields fall, that's not going to make life much easier. >> has iata come up with a contingency plan and what are the implications of such a

fallout? >> well, the implications of the industry are fairly significant if it affects the whole eurozone, the whole european economy and that will have a knock-on effect around the world. so let's hope any damage canc b contained. but in terms of actually handing the airline industries' money and purchasing that money, of course, we've made contingency plans for anything that could happen. >> some 1,200 airlines have complied with the emissions scheme. where do you stand on getting these countries to either comply or get back to the negotiating table. >> what we're trying to do in terms of this whole debate is try to get the parties around the table, the countries involved, to thrash out a global scheme, a global solution to the problems of aviation emissions. going it alone as the europeans have done is quite clearly the wrong way to go. and i say quite clearly because

it's governments around the world now who are protesting against this unilateral and extra territorial by the europeans. >> they have some 300 million travelers. when do you expect them to become number one? >> obviously it's number two now and growing fast. one day, of course, if growth continues it will become number one. it's got a little way to go. the u.s. market is a huge market but the chinese market is growing very, very fast and it's great thing for the chinese carriers. >> all right. we're joined now by regan wong, equity analyst. regan, it's interesting that they didn't lower its profitability forecast, more in line of some of the headlines we've gotten in the past weeks. what's your own view as to how bad the industry is shaping up for the airline industry? >> i think this year will be a very tough year for airlines

because the pressure will come from the revenue site. so last year was a year of cost and this year will be a year of revenue pressure. but they're not immune. what enwe doird study on cost pass-through for the airlines we found the cost pass-through for low cost areas in asia have also declined. so airlines in asia now finding it more difficult to pass on the high fuel cost to customers and debt will be the main source of profit pressure for them this year. >> we've certainly hard some cautionary comments from qantas last year. rigan, what are the airlines you think are better positioned in this environmental specifically? >> well, i think right now there are two markets that have seen

better pricing power, based on the first quarter results. the first one is indonesia, premium airline markets, where we saw indonesia is still raising their fares and seeing strong factors and euro improvement and profitability and that's because they have a monopoly on that market, and they still are able to pass on the fuel costs by charging passengers willing to pay higher prices for tickets. the second market is still relatively good prospects would be in the malaysia markets and reduction of capacity of malaysia airlines. i think that's it. generally across the board we still see pressure across the airline this year. >> ri fw an, we showed a couple of chinese airline stocks that are down despite the green we're

seeing across the board and positive sounds from that country with regard to aircraft purchasing going forward. why aren't we seeing better performance from some of these chinese airlines? does it go back to the concerns you raised just a few minutes ago? >> i think the chinese airlines is more for long-term growth story. and i think day-to-day stock price movements probably don't reflect that quite well. >> a little bit of a strange situation, though, ross, when you consider all the different factors, but i like rigan's position. rigan wong, equity analyst. thanks. >> let's move on. we'll go from the skies to the sea. we'll look at the crisis and hear from the world's biggest shipping web portal intraabout a new reliability index. trade links coming up next.

the shipping industry has been facing pretty rough seas since the start of the crisis and it shows no signs of baiting. it's dropped around 40% in the past 12 months. according to the rating, shipping has plummeted every day. smaller freight companies are struggling to stay in business. the ceo of shipping web portal intra says they're undergoing a profound shift. together with research firm sea intel, they've launched a new index. i spoke with ken bloom and asked him about the impact of the delays on the industry. >> it's a huge problem for the industry for big shippers and small shippers alike. basically people are left guessing when their container will arrive. >> has the problem gotten better or worse since the 2008 global financial crisis?

we've seen global swings in that period. >> right. i guess i'm saying is have there been any changes in the ability of finance and trade link? i would imagine over time as places get more sophisticated, you know, on-time deliveries would improve but perhaps there are other factors overriding making it more difficult to receive goods when you would expect them. >> well, we haven't seen that in particular, but what we do know is that reliability has never been an area of focus, and in this new normal of increasingly challenging times, this will become increasingly important. >> if you could just offer your thoughts as someone who tracks global freight as to what kind of behavior we're seeing now, maybe compared with 2008. there's so much concern about the global economy. what impact is demand weakness having on shipping and freight activity broadly? >> right. so we're seeing some pretty dramatic shifts. i mean first of all, china, the

largest exporting country in the world, typically has shown double-digit increases in trade year on year, comparing just 2008 to 2011 we see barely any growth at all. on the other hand, you'll see fairly dramatic increases from south korea, from vietnam, even from the united states. so you're seeing some pretty dramatic shifts in just a couple-year period. >> and what, concern, ken, do y your eye on in terms of shipping tisht next? >> for us we see shipping as the ultimate leading indicator of economic trade, and we're seeing not a lot of o growth in those markets that typically have driven trade growth. >> those markets being --? >> we're not seeing a lot of growth from europe. most notably trade patterns from china to france, china to belgium are particularly lackluster and that gives us a concern about europe in general.

>> for more, go to our website, tradelinks.cnbc.com. >> more from arnab. i want to get a sense of how you feel about the synchronicity of the slowdown not only europe but the u.s. and china and elsewhere at the moment and how it's going to pan out. >> our take on it is the whole world economy, there's not going to be anything such as decoupling. we're in a globalized system and everybody is moving up and down whether it's because of trade shocks or financial stocks, confidence hits. >> how bad is it going to get? >> well, it's probably not going to fall off a cliff in -- like it did in 2008, again, unless there's a really disruptive event in europe. and i suppose that the chances of that have been reduced by this bailout because even if there's a grexit, we don't think

that's going to happen. we think greece is going to be a 2013 story. >> how long are we going fw dealing with this for? >> we'll be dealing with this problem for years, for a very long time. >> that means he can keep coming back to chat with us. >> yeah. bond yields still -- i mean is there any chance that bunds start to get infected if there's any talk of any realistic move toward any sort of fiscal union that is real. >> that would imply more inflation in germany. >> would bunds get hit or not? >> absolutely. if we have it, then the convergence trade is going to be back on. that's what a fiscal union is going to imply in the long run. what we've got going on is a divergence trade and that's what's happening in the underlying economies, right? germany is doing well and the periphery is doing terribly and as lodge as we don't have a fiscal union, that's going to continue in one way or the other. we're just temporizing. >> if people are positioning as

they're kind of starting to do, you're saying that this trade for germany ends and begins to turn around. >> right. i'm not sure that people are ready to position or should be ready to position for fiscal union yet. i don't think what we have really here going on is risk on. it's covering of shorts. it's a relief rally. >> stock losses. >> arnab das, thank you so much, sir, for your time this morning. >> always great to have you oven our show. still to come on the show. >> spain takes the bull by the horn, agreels to a $100 billion bailout but how is the population reacting? >> we'll get more on that. plus, of course, we'll be over in new york. we're joined by a guest host who says he thinks the continuing success of the recession is modest. in here, heavy rental equipment in the middle of nowhere, is always headed somewhere. to give it a sense of direction, at&t created a mobile asset solution to protect and track everything. so every piece of equipment knows where it is, how it's doing or where it goes next.

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welcome back to "worldwide exchange." if you're just joining us, i'm kelly evans. >> and i'm ross westgate. they're falling back toward that 6% level. >> this as madrid gets a 100 billion bailout for its troubled banks but investors have the wait ten days to find out how much they actually need. >> china's trade data trades unexpectedly in may, but the latest figures out of beijing showing industrial output and retail sales slowing.

>> if you're just tuning in, let's take a quick check of how u.s. markets are position. we've got green behind me, the dow jones pointed up by more than a hundred points. triple digits aet this hour. nasdaq, a similar story and the s&p up by 15. how off don you see, by the way, the exact same value here, just a little curiosity. anyway, take a look at the global markets. ftse, cnbc, quite popular when we opened we've started to give back some of those gains. let ee take a look at some of the boers individually. you're seeing the same kind of thing. the ftse 100 is now up about 1.4%. the xetra dax, only about 2.1%. we were closer to 3% earlier i believe. cac 40 out of paris. ibex out of spain, obviously the one we're keeping a close eye on in the wick of its banking bailout. that's up by about 3.5%. again, ross, we were closer to

4% first thing this morning. >> so that's the hand we're giving over from europe to the united states. the focus and the gangs all on the spanish banking session. remember, spain down at nine-year lows. kelly says the spanish bangs also as a low. santander up 3.5%. ban kin ter up, ban is toe, up 3.25 as well. already we're getting a short covering. dollar/yen pretty steady at 79.57. euro dollar. a little weaker. sterling dollar, 155.57 this morning. bund markets key really are

going to be decision or deciding on the effectiveness or not of this loan, this potential loan for spanish banks. they did get down to 6%. slightly higher than that. italian yields at 5.71 and after hitting those record low levels on june 1st german ten-year bund yields are slightly high. remember we got down to 1.174%, kelly. >> levels that seem extraordinary now. eu commissioner -- eu competitioner says they will be subject to conditions and that those banks that receive aid will have to put forward restructuring plans. his comments follow spain's deal to shore up the country's troubled lenders. the spokesman for eu monetary affairs commissioner says the average interest rate on these loans could be between 3% and 4%. the amount that spain would b e borrow may not reach the euro

maximum and he, of course, also said banks use special accounts. it may not add to spain's deficit, although it would add to its debt. a number of analysts and economists have joined cnbc this morning from madrid to talk about the aid deal and here's what they had to say. >> it geesd for the bank run and there is access to credit but it doesn't solve a lot of the underlying problems that spain has, which is essentially the lack of growth in spain and also a property market it keeps turning down. >> the main enemy of the spanish economy is the recession and the recession started in the last summer, and we have buried the press political economy. if fiscal policy is the press, and the monetary policies is the press. if we don't modify these kind of policies, we're going to have problems. >> the problem is that there's now up to 100 billion euros to recapitalize spanish banks, but the uncertainty for the banks themselves and if you are, you know, exposed to those banks is

you're potentially facing quite a significant dilution once the government decides how much equity is going to be injected into the banks. >> the devil is in the details as they say it's one of those, you make the announcement, what do we know. >> don't worry about it. it will be fine. you're getting subordinated down the capital structure. it's fine. >> it depends whether the money is coming from the efs. if we're going to, we only have a few weeks to do this. >> it would still have to be, you know -- there's a process for that. >> if the efs and the netherlands and others would have to approve it. >> they want more collateral which we were joking over the weekend, i hope they like olive oil because considering what spain's condition is in it's really not -- >> a lot of bricks and mortar lying around not doing much.

>> rafael nadal. how about that? >> exactly. nice to see you. thanks for joining us. what's your reaction to the spanish news and what it means, what it really means? >> well, first of all i want to say i'd be happy to take reoh ha's collateral. it doesn't have to be olive oil. one of the things it teaches us is that banking system debt right now is essentially subordinated sovereign debt. frankly it's somewhat soft economic conditions that are likely to fix or solve themselves in the next couple of

years. >> so what -- how -- okay. so how beneficial is this announcement? >> well, i think it's hugely beneficial in stopping the bleeding, and that's really, of course, the first step to more of a long-term solve or more of a long-term solution, and we really see spain's problems as more about underinvestment in human capital. if memory serves, spain has the second lowest high school graduation rate of the oecd nations. that's at the center of the western world, u.s. is powerful in pushing forward, jeff doesn't have the same strength in spain. part of that is as a result of the construction boom and part of the broader economic soft ps right now. >> given to what this has done to sovereign risk profile, is it fair to describe the broad risk we're seeing on broad markets really to the reaction that there are further integration steps across the eurozone and not necessarily to the specific details of this bailout? >> well, we believe that pretty

firmly it's going to take frankly another round of crisis before a true fiscal integration takes hold. realistically what we're seeing with spain, within the europe zone and within the early tra trading in the u.s. markets is the reversal of all the nervousness that's intensely been built up. again, there are no long-term solutions embedded in this sort of proposal. what we really need to see, frankly, is either a redistribution of tax dollars on the continental level in order to tie the fiscal fate of the eurozone much more closely together. >> all right. fwee is going to stay with us for the hour so we'll have more thoughts. meanwhile confirming the second largest economy is slowing. also explain beijing's preemptive move to cut the interest rate. that's the first such cut since 2008 but china's may figures did surpass expectations. a record monthly dip may have helped prop up exports. a rise in imports is seen as a sign of improving domestic

demand. guy, as i mentioned, still with us. quick reaction to the data out of china here. does it support risk sentiment? is there something that we should -- you know, one of those data points in familiar that you would focus on? >> well, i think particularly the export/import is sort of an intriguing story here. i had the pleasure of living with them. simply the maps across the country from when i was there were remarkably different because of this huge consumerization push, even among the suburbs within the major cities and the fact that the chinese consumer is slowly taking over as a driver of greater economic activity is one of the long-term sort of investmenting market sub says stories that we've seen in our lifer time. that's what i would choose to focus on. >> guy, we'll leave it there for now and we'll take a quick check of today's other top stories. china's company has slashed the size of its plan in hong kong by

over 60% high lighting the recent lug sluggish demand for new ones in the region. this, of course, follows them pulling in china and others as well. >> yeah. cisco's recovery getting off to a rocky start. they saw their uk underlying sales fall. more pressure for a company that used to take one in ever seven pounds spend in britain going to tesco. >> no kidding. i've got to tesco a handful of times myself. a report suggesting that angela merkel not serious about fulfilling a european financial transaction tax, this calling into question britain's future. >> britain's never going to approve it so the germans know they can support it without knowing that it ain't going to go through. kind of mangs sense to me. the french president looking for

support. this is crucial if his party gains control of the legislature as well because that means they can implement their so-called growth policies which i think in their terms meaning borrowing more money or lowering retirement ages or whatever. >> look. and if they want to keep doing that, if that wasn't just a political gesture, taxes are going up in france. they're going up. >> they took that 9% tax rate. >> ouch. that's quite high. i think we had something like that 50 years ago in the u.s. if you want to join us on the conversation here at cnbc, get in touch with us. i'm us or tweet us or contact us individually. bmw's talking about group sales up 6.4%. that's a record amount. they say they're also on track for record-high sales in 2012. audi also having record may sales as well. so there's two companies there in the auto sector that's certainly outperforming. still to come, we'll take a look

at the resilience of the u.s. economy as s&p resuming its kmo and keeps a negative outlook. we'll be back in a few moments.

sales as well.

all right. if you're just waking up in the

u.s., wake up earlier next time. yields are falling back toward that 6% level. >> madrid gets a 100 billion euro bank bailout to shore up its banks. >> industrial output in retail sales slow. >> all right. listen to this. s&p sayings ined dia may becomee first brick country to lose its rating. it says slowing gdp growth and economic policy-making are just some of the factors pushing up the risk that india, which has a negative could lose its investment grade rating and the report says that they've slowed. it could largely determine whether the country can maintain that investment. >> we see the rupee falling on

that. they're falling as india is concerned about inflation concerns. its growth rate has been affected. >> i was trying to figure what's the first of the bricks to win the investment great rating. >> good question. let us know. anyway, s&p meanwhile has reaffirmed its lowered u.s. credit rating and it's keeping a negative outlook. s&p cut the long-term rating last august. they say u.s. politicians have done little to address the budget desit which expects it to grow to 87ch by 2016. s&p said the u.s. economy is resilient and many hold dollar reserves and a vote of confidence in the u.s. currency, i would guess in light of what's going on with the euro. they're credit positive for u.s.

banks. in its weekly credit outlook moody plans standardized how to weigh for big banks. back with us is guy libas. guy, reaction to india being downgraded. do ratings matter? >> ratings do matter. credit ratings really surrounded around one area of ratings. to be honest, s&p and moody's, they've done a pretty incredible job if perhaps later than the markets. now, with regard to india, i think really this is a sign of ha we're concerning with high-flying brick, super rapidly developing nations are slowly transitions into a little bit of a different state where they're no longer on that structural long-term growth and they're looking at the e ebb and flow and cyclical.

when it comes to the u.s. >> i was going to say in india's case, guy, they've done a lot of ooh damage themselves, haven't they, the government. >> they have certainly and their policies have been a little more aggressive in that respect than some of their peers such as china in particular which has taken a very strong inflation fighting course to prevent some of the long-term ails that could affect developing countries. >> you were going to go onto the u.s. >> yeah, absolutely. one of the things that i wanted to mention is their s&p 12 months ago describe add 2.1 trillion dollar budget cut which was executed as a down payment on reducing the u.s.'s deficit. and since then, most of the proposals that have come out of congress have really revolved around more spending, be it further tax cuts, be it a program such as the highway transportation bill. as a result, the political winds sort of rebehind reducing the deficit, although the u.s. population this thee, the political winds simply aren't there to continue it further, at the very least not until the

november elections are past. >> all right. guy will be back with more in just a bit. leave it for now. after the break, we're going to speak with the formal spanish finance ministry and the exec tiff of imf about the country's request for a bailout. should be interesting. stay with us. >> another bailout. optionsxpress, where you can trade your favorite products

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let's bring you up to speed over what happened over the weekend. up to $100 billion will be given to the spain banks coming from the efsf, that's probably going to happen first, or the esm once the pailout institution is up and running in july. the specific amount won't be known until june 21st and we still won't know the details of the terms either, although an official this morning says the lending rates could be in the range of 3% to 4%, significantly lower than what spain can borrow at now. its market lending rates are at about 6% and many banks higher. let's put this in context with other banks. greece has gotten almost a quart ore of a trillion dollar in aid in several schemes going back to may of 2010.

ireland for its part has gotten almost 750 billion euros of bailout or assistant money. that going back to 2010. portugal, up to 80 billion. the difference is this is not a sovereign bailout. what it is, though, give the much bigger size of its economy is an indication that for spain, this $100 billion going to the banks which will add to the debt level of the country is one reason why you've seen a lot of analysts concerned that this may be the first such move for any assistance, not necessarily the last one, ross. >> no. and as you say, kelly, the choice of words to describe this line of credit. it's drawn strong criticism in spain itself. they've lambasted the prime mon minister for refusing to call it a rescue. he was also heavily criticized to attend spain's first match for the euro 2012 football

tournament on sunday as well. i love the way it's written soccer for kelly and football for me when we talk about that. we get over to madrid in just a few minutes to talk to jose. but guy libas still with us. do you think before we go to madrid, this was as much about putting in some protective measures ahead of the greek election this weekend? >> i don't think there's so much of the grease election factored in here. i think what this is trying to stem the bleeding before it gets any worse. we saw a somewhat similar situation in ireland a couple of years ago when the country was face bailingout, i guess less than a couple of years ago, where the banking system seemed to be increasing over time. >> i mean what was interesting about ireland is the state decided to basically put the state or the people in hock to

bail out banks. they could have just let the banks go. they didn't have to commit state funds to it. >> in truth, countries never have to bail out their banking system but the downside risks are huge. i mean it's very hard to imagine what the pop laugh problems could be if people could chblt get their money out of financial institutions. so i think in that sense because of the political risks that banks naturally entail, we sort of look at as we mentioned earlier in the show, banks with subordinate levels of the capital structure, at least when it comes to larger banks. >> all right, guy, we're going to leave it there for the time being. we're going to give a quick check of futures. are we saying good-bye to guy? >> yes. >> guy, thank you so much for joining us for the last half hour. lots of thoughts. so much going on. appreciate your team. u.s. futures are still in the green. the dow jones pointed up about

100 points. strong percentage gains potentially for the nasdaq and s&p 500 as well. >> yeah. follows a pretty strong session in europe. still to come on "worldwide exchange," does tim cook have anything up his sleeve. he takes the stanch of the annual development meeting today. we'll have a preview and we'll speculate a little bit over any possible surprises. optionsxpress, where you can trade your favorite products,

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welcome to "worldwide exchange." if you're just joining us, i'll kelly evans. >> these are the headlines around the world. >> yields in the country are falling back toward 6%. >> this as madrid get as $100 billion euro bailout but investors have to wait ten days to find out how much they actually need. >> china's trade data trade unexpect ily in may, but the latest figures out of beijing also show industrial output and retail sales slowing. >> plus why india may become the first britain nation to lose its investment grade rating.

welcome to the program this morning. we receive a lot of green. u.s. futures are poised higher. 144 points as the implied open for dow jones. that compares with about three points. although we should check that quote. i know we were having some trouble with it on friday. the nasdaq would be pointed up about 27 points as well take a quick like at what's happened across european markets and i think we can see it. cac 40 out of paris up more than 2%. ibex, 35, and spain, about 3.9% at this point, pretty significant move. bunds, of course, the one to watch. the 10-year bund, 1.4%. the gilt is up as well at 1.7%. we're seeing a risk-on move. spain down to 6.13%. again, that's off the lowest

levels that we've seen. we've moved, touched higher. italy down to 5.73%. >> it's worth pointing out we're not going to get details on how the spanish line of credit will work until what, around june 21st, i think. >> important details that could make a difference in terms of how people perceive it. >> with the esfm, esf. and how much. >> alphabet soup of acronyms. apple is kicking off its world wide conference in san francisco. it's one of the hottest events in the tech world. they offered 5,000 tickets and they sold out in less than two hours. more on what to expect, we're joined by gene munster at piper jaffray. so, gene, what is the headline? is it apple maps? >> hello. >> hi, gene. can you hear us? >> yep. foyt you now. yep, i got you now, loud and clear. >> so what's the highlight going

to be? >> the highlights, it's all about mobile. keep an eye on what they're going to say about ios, the updates, the new mobile platform. the google maps is going toy way. it's going to be apple maps and ultimately we're going to see a better integration of facebook and also changes they're making to the actual software with their mobile, we're probably going to get some insight on what i 5 is going to look like and then the real wild card is around apple television and a software development kit. there's a lot that's going to be going on. the hard part is going to be on what to focus on. >> what's apple maps? is it something that's going to put its share price back into position and be a threat for google? >> well, what it's going to do sit's going to differential more between the iphone and android phones.

if you look at how people actually use their phone, the fourth most popular fung that people do is they use maps. and so right now google maps and maps on the ios are the same, so there's no differentiation on that. the other three items ahead of that if you look at texting, i'm, and web surfing that people use their phones for, it's hard to differentiate on those too. so think the real key here in apple brings these maps themselves is going to be drawing a more distinct line in terms of the functions, in terms of what that operating system feels like. i think this is going to be a good step. i think what's going to be more important to the stock getting off of its back and starting to work is investors giving apple a little bit of credit for how big of an upgrade iphone 5 is actually going to be. >> gene, you're in hong kong for us this morning. are you doing some supply chain recon? >> yep. that's exactly what i'm doing. we're -- we have a conference here that we do kind of a

typical yearly tech conference, but also i'm going and meeting with supply chains. so i'm kind of traveling throughout asia today. so most of that focus is really on apple television and ultimately i think that's what -- doing detective work, we're trying to figure out what's going on. while it would be nice to be in san francisco, we're trying to figure out what people are going to be talking about six months from now. >> we'redo you think we're a li early for apple tv, gene? >> what we thunk is it's going to be out in the beginning on f 2013. this is an actually apple television, somewhere between a 40 ifr 40-inch and 50-inch tv. it's going to change how people use the tv. if you think how the smartphone has changed how people use their cell phone, i think this is going to be a similar dramatic shift. ultimately the paradigm of television, how people view tv is going to change. hopefully we'll see some insight

into that with the tv developer kit. we're not going to see any hardware today, but it's coming. >> look. tim cook has talked about the need to be social but not necessarily they don't need to own a social network. so do you think they're going to start adding facebook options to some of their own native apps? >> yeah. what they'll probably do is integrate facebook more closely into the operating system, similar to what they've done with twitter to make it really easy for you to do tweets from your iphone. obviously that's a big thing people do with their phones is social. i think therewill be options around the use and interaction with facebook and the ios. >> that will be good for facebook the first couple of weeks. >> mm-hmm. >> okay. he's not going any further than that. gene, thanking for joining us. >> still to come, klm clears the air on their interest in that

airline. more just next.

head of the u.s. open. the bank, especially the span in banks, no surprise after spain

is officially requested what it calls a credit line for spanish banks which may be up to 100 billion euros. the details won't be finally divulged until june 21st. they're saying they won't request eu aid funds. no more steps needed. what is the reaction in madrid? joining us is one jose professor of economics at university of nars business school. thanks so much indeed for joining us. the spanish prime minister has gone out of his way to say this is not bailout, this is just a loan for banks. how do those in madrid and spanish population see it? >> one of the things in general, the reaction has been very positive, and the spanish people have reacted favorably to a possible bailout, let's put it that way. it's not a general bailout of the spanish economy.

we feel they're more optimistic today than we werelast thursday, let's say. >> juan, explain to me. if this basically will put more debt on spain's books while giving some assistance to its banks why we should view it as any sort of resolution given that spain still doesn't have e any to print its own currency? >> we think the program is improving there. at the same time the government is going to lend the money to the bank, so the banks will have to pay interest back to government and return the loan when it is due. so, in fact, if everything goes well as we expect, the spanish

government will not have at the end of the process the higher debt that it has today. it has to go very well. >> thinks going well, though, don't they ultimately depend on the spanish economy going well and the spanish property market stopping its decline? and there's no sign of either of those things happening. >> yeah. one of the problems of the spanish economy is their lack of banking credit to the small and medium firms and to families as well. with this partial rescue from the european community, we expect this flow of credit to go back to normal so that at the end, we expect the spanish to react positively to that and create a little more employment. >> juan, finally we're getting records that ban co-popular for example won't take the aid because it doesn't need it.

isn't there going to fw a problem if this there's perceived risks of getting these funds? wouldn't it be better require all banks to participate? >> but spanish banks are difficult, in fact. we temd to forget. they refuse spanish banks that are, in fact, very solid and they're in a very healthy position. i wouldn't say whether the bank is one of them or not. i would prefer for them to say that. again, this is not a general rescue for the spanish banks system. it has to be a rescue for particular banks who are in a very weak position. >> juan jose, thanks very much indeed for joining us. professor of economics of the university of novaris school in madrid. kelly. >> he was one who called it bank bailout. spain's prime minister has

simply described the credit line extended to his banks as what happened yesterday. that was over the weekend. early willer we asked you to send us your ideas of what you thought. >> first response, it doesn't matter. lead, follow or get out of the way if paralysis kills. many say the risk-on move isn't so much about the bailout as it is about the idea that it's one steb. what do you think? get in touch with us at cnbc.com. tweet us @cnbcwex oracly underscore evans or ross underscore westgate. >> people said he's turning around and now he's -- what else is he going do? i think he should have gone to the french open personally to watch nadal. >> we're still waiting for your that to conclude as well. so many more questions. who's going to win the french

open. that's also one of them as well. besides spain, airlines very much in focus today. boeing expects to book up to 1,000 orders for its next generation. the head of the commercial airlines unit says the country has already received 450 orders for the 743 max but expects pricing structure. others say he's not concentrating on a merger with us airways despite pressure to strike a deal. tom holden says american still plans to exit bankruptcy at the end of the year, although that timetable could slip if unions don't agray to new contracts. the judge could rule this month for amm to stop labor talks. american not the only company rolling out a new type. emily chan asked klm's chief peter hartman about it. they buying a 10% stake in his

company. this is what he said. >> that is not the case. that is incorrect, that story. there are many, many rumors and immediately it's confusing. it's correct that we are talking also to find ways where we could cooperate between their hope. abu dhabi maybe has connections to the areas, india and australia, and they could use our help in europe, paris, and amsterdam to connect into europe but also united states, central and mid america. >> how prepared are you for the european crisis? >> we took measures already a while ago, and on this moment we are stabilizing the results, but everything is based on the assumption about what the fuel prices will do and what the crisis in europe will do. >> all right. as we head to break, let's bring you today's headlines. stocks rallying as bangs lead

the charge in spain while medias fall back toward that 6% level. madrid get 1/00 billion dollar bailout to shore up its troubles banks and china sees an unexpected pickup in trade in may, although industrial output in retail sales both slow. with the spark miles card from capital one, thor's couture gets the most rewards of any small business credit card. your boa! [ garth ] thor's small business earns double miles on every purchase, every day! ahh, the new fabrics, put it on my spark card. [ garth ] why settle for less? the spiked heels are working. wait! [ garth ] great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day! what's in your wallet? [ cheers and applause ] all in one account. keep watch on the markets. or use our exclusive tools to help find ideas.

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unless you ask, what's next? [ zapping ] [ clang ] this is the next level of performance. the next level of innovation. the next rx. the all-new f sport. this is the pursuit of perfection. >> this is where we stand right now. we're up 3% gains for the ibex. it was up 4% this morning but we're off down at nine-year lows. 1% for the cac 40. ftse up 1%. this follows, of course, a line of credit for spanish barpgs that could be 100 billion euros. >> that's right. the dow pointed up about 130 points for the open. nasdaq up about 25. s&p higher too.

and lots of thoughts already on cnbc about the best way to trade yourself through these markets. this is what some of the voices have been telling us. >> i don't think the market has risen dord and it was. because of this spanish deal. it was rising in anticipate of central bankers everywhere, putting more liquidity into the pot. >> markets on one hand saying give me a reason to get me out of this position. you know, give me more money. i'm not necessarily looking for this to be kwamt feed and focus bud some sort of liquidity injection. >> this year will be a very tough year for airlines because the pressure will come from the revenue site. so last year was a year of cost pressure and this year will be a year of revenue pressure.

>> okay. joining us now is michael live from the cme. so, michael. what's your trade this morning. i see oil's back up, at least for brent? >> not surprised that we're seeing the way the commodities market is acting for the liquidity scenario for the same reason they have been anticipating a rally in the market, commodities and equity based and for that reason there's more reason to get short because the belief is you're going to put in most of the good karma into the market right now before we open in the u.s. that's the 50-day moving average. below 1,300 is where this market continuously seemed to get poised and as we rally continuously above the levelings the market continues to teeter. >> you're not impressed. we're looking at the

euro/dollar. we saw it strengthen immediately on this news and now it's weakening. i wonder if we're still expecting the correlation where we see a weaker euro, weaker markets risk off to persist this week. >> i'm not surprised that 125, you know, continues to be the pivot here, but for the same reasons, it seems as though at the end of the day here on the u.s. side, this government -- its policy is, you know, illiquid with their kind of transformative nature. it seems as though the soft dollar continues to come back into focus. and for that reason, there's -- you know, there's still a lot of belief in the market that the euro's going to be a little bit more toward that 121, 122 level. we're just continuing to find the bids in the market also that shows that resistance is pretty solid from where it is today i guess what i mean is it a bad sign or is it okay if the euro is weakening? is it weakening for kind of the right or wrong reasons? >> no. i think it's weakening for the right reasons, and it is okay,

to answer that without getting too technical. i i'm sorry on that bad habit. really what happens is the belief in the market is that the currency will survive. i think right now at least some of the premise is that you're starting to see a lot more of a vernacular come back in concerning germany. if the euro bond scenario does come about or if there's been a little bit of shift in premise and that is one of the reasons i think you start seeing these momentarily robust moves on the euro from the bid side, and that is why, at least, i think why what is not necessarily the next shoe to drop but what's going to be the next story because we believe that italy is going to be right behind here after spain gets their dosage. and, again, that's where that euro bond scenario comes into play because we're really transform actively looking at where it is the entire region comes into play and i think it's the euro bond. >> although, there's absolutely no move on that at all on germany. if they don't want it, it's not

going to happen, michael. as the plan goes forward. i want to get your thoughts as well on how the rest of the global economy is playing into the commodity space. it was taken as better import data out of china, they're suggesting there's still demand for things like copper, but how is that story going to drive that space? >> ross, one of the things i've looked at is how cheap only a week and a half ago the grain markets hire got specifically corn and wheat. now, there has been this slight correlation for industrial metals being copper getting very cheap at the same time. and a lot of the premise was on some of china's moves and, of course, a rate scenario. but, again, i don't think china's going to slow down overnight and that's why you start seeing very -- you know, very promiscuous speculators start to look at the bottoms in some of these very robust and liquid markets much like the grains and copper. and for those reasons there is the propensity to watch the bid come into that space commodities

and not necessarily in crude oil because the brent crude cross continuously looks to narrow. that's why i think a lot more speculation will come in due to liquidity in copper, and specifically watch the grains. i think corn is still poised for one rally again coming into the middle of this month. >> michael, i'm heading off to the opec meetings this week. are you suggesting it would be tough for some of these countries who would like a triple-digit oil price to see it stay at these levels? >> listen. they want it there, but then there's reality. again, the more you start flooding the markets with liquidity from central banks all the way around, it just shows you that if we do revisit 2008 -- i know you don't want to hear that, but if we get back into that scenario, the trijt-digit oil is way behind us. it's more like when do we break 80. >> all right. i'll pose that question and see if i don't get something out of

some meetings. michael gurka from asset management with us. thanks, michael. a quick check of what's on today's agenda in the u.s. no economic data. although we are expecting report ordinance inflation, retail sales and consumer sentiment later this week. we'll hear from dennis lockhart and evans later. the group of financial regulators that monitor systemic risk will meet at some point later today. >> they wake up, see how they feel, and they say, hey, how about 3:00. i don't know. is that how that works? >> probably more or less. they do it around the football. anyway, raj gupta on trial for insider trading won't take the stand in his own defense. gupta is charging with passing hedge information to another when he sat on the boards of goldman and procter & gamble. he's serving around 11-year prison sentence.

after calling high-profile witnesses like goldman's lloyd. >> this is a live shot. gordon brown is testifying. this is an inquiry and their relationship between politicians and the media. later the current prime minister david cameron will also take too the stand. >> what's at stake for the levenson hearings? >> control of the press. >> that's a small one. >> yes. i think the point is the rules are already in place. they need everybody to obey the laws. >> well, we'll keep an eye on those throughout the day as well. you'll just have to forge ahead without me. >> you're off to vienna for the opec meeting. >> off to vienna. off to see the danube that that's it for the "worldwide exchange." coming up next "squawk box" stateside. have a positively beautiful day. >> thanks for tuning in. [ male announcer ] this is genco services --

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add another list to the name. spain becomes the fourth country to need assistance. the global markets seem to be relieved for now at least until sunday. u.s. equity futures are pointing positively. it's monday, june 11th, 2012. "squawk box" begins right now. >> good monday morning, everybody. i'm becky quick along with